Indonesian utility Medco Power Generation is still keen to participate in a tender for the Java-1 power project (2x800MW). However, it now prepares to launch a bid together with Korea Electric and Nebras Power, turning its back on former partner Mitsui. Tender documents have to be submitted to PLN early next week.
“We’re partnering with those that have the commitment,” Lukman Mahfoedz, president of Medco Power Indonesia said, explaining that consortium partners were changed because of the “strategic importance” of the Java-1 project
Tangguh gas supply guaranteed
State electricity company PLN changed the terms of the Java-1 tender in late May, requiring the winning bidder to fuel the power plant with gas sourced from the Tangguh field in Bintuni Bay, West Papua. Previously, all bidders were responsible for sourcing their own gas supply – which PLN procurement now calls “a mistake.”
Under the new rule, gas supply from Tangguh is guaranteed so project developers can “immediately” start operating the plant. In full operation, the 2x800MW Java-1 power plant requires a 250 million cubic feet per day of gas.
PNG said it would supply as necessary gas volumes to Java-1 as soon as it was constructed, seeking for the project to start up in early 2018.
Government targets 35 GW of new-builds
Firm gas supply agreement is mean to fast-track the project, but Indonesia’s regulator SKK Migas also enforced it as a way of getting a domestic offtaker for gas produced at Indonesia’s remote Tangguh field. Up to 75% of gas production from Tangguh Train III will be marketed through PLN – supporting the government’s aspiration to build 35 GW of new gas power generating capacity.
Java-1 is the first of these state-backed pilot projects, so Medco is seeing the tender as a potential door opener to a flurry of follow-up project.